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Introduction to Business Analytics

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Introduction to Business Analytics

  1. 1. Introduction to Business Analytics 1 Dr. Amitabh Mishra
  2. 2. • Analytics is a field which combines following into one - 1. Data, 2. Information technology, 3. Statistical analysis, 4. Quantitative methods and 5. Computer-based models • This all are combined to provide decision makers all the possible scenarios to make a well thought and researched decision. Dr. Amitabh Mishra 2
  3. 3. Meaning of Business Analytics • Business analytics (BA) refers to – “The skills, technologies, practices for continuous developing new insights and understanding of business performance based on data and statistical methods”. – “the practice of exploration of an organization’s data with emphasis on statistical analysis. Business analytics is used by companies committed to data-driven decision making. Dr. Amitabh Mishra 3
  4. 4. – “The statistical analysis of the data a business has acquired in order to make decisions that are based on evidence rather than a guess”. – “A combination of data analytics, business intelligence and computer programming. It is the science of analysing data to find out patterns that will be helpful in developing strategies” Dr. Amitabh Mishra 4
  5. 5. Evolution of Business Analytics • Business analytics has been existence since very long time and has evolved with availability of newer and better technologies. • It has its roots in operations research, which was extensively used during World War II. Operations research was an analytical way to look at data to conduct military operations. • Over a period of time, this technique started getting utilized for business. Here operation’s research evolved into management science. Again, basis for management science remained same as operation research in data, decision making models, etc. Dr. Amitabh Mishra 5
  6. 6. • As the economies started developing and companies became more and more competitive, management science evolved into- – Business intelligence, – Decision support systems and into – PC software. Dr. Amitabh Mishra 6
  7. 7. SIGNIFICANCE AND USAGES OF BUSINESS ANALYITCS • To make data-driven decisions • Converts available data into valuable information. • Eliminate guesswork • Get faster answer to questions • Get insight into customer behavior • Get key business metrics reports when and where needed Dr. Amitabh Mishra 7
  8. 8. • It impacts functioning of the whole organization. And hence, can- – Improve profitability of the business – Increase market share and revenue and – Provide better return to a shareholder – Reduce overall cost – Sustain in competition – Monitor KPIs (Key Performance Indicators) and – React to changing trends in real time Dr. Amitabh Mishra 8
  9. 9. CHALLANGES FOR BUSINESS ANALYITCS • Business analytics depends on sufficient volumes of high quality data. • The difficulty in ensuring data quality. • Data warehousing require a lot more storage space than it did speed. • Business analytics is becoming a tool that can influence the outcome of customer interactions. Dr. Amitabh Mishra 9
  10. 10. • Technology infrastructure and tools must be able to handle the data and Business Analytics processes. • Organizations should be prepared for the changes that Business Analytics bring to current business and technology operations. Dr. Amitabh Mishra 10
  11. 11. Scope of Business Analytics • Business analytics has a wide range of application and usages- – Descriptive analysis – Predictive analysis – Prescriptive analysis Dr. Amitabh Mishra 11
  12. 12. Descriptive Analysis • This branch of Business Analytics analyses and finds answer to the question- “What has happened in the past?”. • Descriptive analysis/ statistics performs the function of “describing” or summarizing raw data to make it easily understandable and interpretable by humans. Dr. Amitabh Mishra 12
  13. 13. Predictive Analytics • This branch of Business Analytics, uses forecasting techniques and statistical models to find out- What is going to happen in future? • Predictive analysis helps us in predicting the future course of events and taking necessary measures for the same. Dr. Amitabh Mishra 13
  14. 14. • Predictive analysis employ- – Predictive modelling and Machine learning techniques. • Predictive modeling uses statistics to predict outcomes. • Machine learning(ML) statistical is the scientific study of algorithms and models that computer systems use to perform a specific task without using explicit instructions, relying on patterns and inference instead. Machine learning algorithms build a mathematical model based on sample data, known in order to make predictions or decisions without being explicitly programmed to perform the task. Dr. Amitabh Mishra 14
  15. 15. Prescriptive Analytics • This branch of Analytics, makes use of optimization and simulation algorithms to find answer to the question- “What should we do?”. • Prescriptive Analysis is used to give advices on possible outcomes. • This is a relatively new field of analytics that allows users to recommend several different possible solutions to the problem and to guide them about the best possible course of action. Dr. Amitabh Mishra 15
  16. 16. USERS OF BUSINESS ANALYITCS 1. Students 2. Business man 3. Accountants and Auditors 4. Organization/Companies/Group of industries/ Small firm Dr. Amitabh Mishra 16
  17. 17. MAIN SOFTWARE USED FOR BUSINESS ANALYITCS 1. MS-EXCEL 2. SPSS 3. R 4. SAS 5. E-views Dr. Amitabh Mishra 17
  18. 18. • SPSS- – SPSS Statistics is a software package used for statistical analysis. Long produced by SPSS Inc., it was acquired by IBM in 2009. The current versions (2014) are officially named IBM SPSS Statistics. • MS-EXCEL- – Microsoft Excel is a spreadsheet application developed by Microsoft for Microsoft Windows. It features calculation, graphing tools, pivot tables, and a macro programming language called Visual Basic for Applications. Dr. Amitabh Mishra 18
  19. 19. MS-EXCEL in Business Analytics – Microsoft Excel is a spreadsheet application developed by Microsoft for Microsoft Windows. – It features • Calculation, • Graphing tools, • Pivot tables, and • A macro programming language called Visual Basic Dr. Amitabh Mishra 19
  20. 20. The Business Analytic Process Dr. Amitabh Mishra 20
  21. 21. Components of Business Analytics • There are 6 major components/categories in any analytics solution: Dr. Amitabh Mishra 21 Components of Business Analytics Data Mining Text Mining Forecasting Predictive Analytics Optimization Visualization
  22. 22. • Data Mining – Create models by uncovering previously unknown trends and pattern in vast amounts of data e.g. detect insurance claims frauds, Retail Market basket analysis. • There are various statistical techniques through which data mining is achieved. – Classification (when we know on which variables to classify the data e.g. age, demographics) – Regression – Clustering (when we don’t know on which factors to classify data) – Associations & Sequencing Models Dr. Amitabh Mishra 22
  23. 23. • Text Mining – Discover and extract meaningful patterns and relationships from text collections. E.g. – Understand sentiments of Customers on social media sites like Twitter, Face book, Blogs, Call centre scripts etc. which are used to improve the Product or Customer service or understand how competitors are doing. Dr. Amitabh Mishra 23
  24. 24. • Forecasting – Analyze & forecast processes that take place over the period of time. E.g. – Predict seasonal energy demand using historical trends, – Predict how many ice creams cones are required considering demand • Predictive Analytics – Create, manage and deploy predictive scoring models. E.g. – Customer churn & retention, – Credit Scoring, – Predicting failure in shop floor machinery Dr. Amitabh Mishra 24
  25. 25. • Optimization– Use of simulations techniques to identify scenarios which will produce best results. E.g. – Sale price optimization, – Identifying optimal Inventory for maximum fulfilment & avoid stock outs. • Visualization– Enhanced exploratory data analysis & output of modelling results with highly interactive statistical graphics. Dr. Amitabh Mishra 25
  26. 26. Dr. Amitabh Mishra 26

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